Light & Wonder shares rise amid analyst confidence on guidance
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The news: Light & Wonder shares rose as Macquarie analysts said they were not concerned about the impact from litigation over its Dragon Train game and expected the company to hit its 2025 guidance.
The numbers: The gaming company’s shares were up 3.3% to $144.42 at 3:15pm AEDT. Over the last 12 months its share price has gained 15.8%.
Macquarie has an ‘outperform’ rating on the stock with a price target of $169.
The context: Macquarie analysts recently visited gaming companies in Las Vegas and toured tribal casinos in Oklahoma and said their conversations with customers supported ongoing market share gains for Light & Wonder.
They forecast a 9% three-year compound annual growth rate for EBITDA excluding stock-based competition to calendar year 2027, with earnings growth across its verticals.
Despite Light & Wonder’s Dragon Train litigation impacts, the analysts were confident around the USD1.4 billion ($2.11 billion) AEBITDA 2025 target, and forecast growth could range between 8% and 13% in the medium term.
In September, rival gambling group Aristocrat took Light & Wonder to court for breach of copyright for its own Dragon Link pokies. Earlier this month, Light & Wonder said it was building a new version of the game.
What they said: “Overall, customer conversations were constructive intimating increased floor share for Light & Wonder, and with little concern regarding Dragon Train litigation, given product depth, breadth and performance — Huff n' Puff franchise was a call-out,” they said.
“That said, near-term gaming ops growth may stall from recent momentum, likely during 4Q24/1Q25, with some of the 2,200 Dragon Train machines converting to lower fee per day placeholder product (short term fix) and with some customers converting machines to sale.”
The source: Macquarie research
